A car lease allows you to drive a vehicle from a dealership for an agreed upon amount of time and miles, and pay for its usage rather than for the full purchase price of the vehicle.
You make monthly payments to be able to drive the car. The monthly payments are based on the car’s projected depreciation value over the course of lease term.
One of the biggest draws to leasing a vehicle is that the monthly payments are typically lower than monthly auto loan payments. Leasing allows you to always enjoy the benefits of driving a new vehicle, since you can trade up to the most current model at the end of every lease term, and keep driving with the newest technology and safety features. It is also a great option for people who don’t want the hassle of car ownership. Since leased new cars are almost always under factory warranty, there are few out-of-pocket repairs and maintenance costs, and you can walk away from the car at the end of the lease without having to spend time and energy trying to resell it.
The short answer to this question is: ‘it depends’. If you drive a lot of miles annual and like to keep your vehicles for longer than three years, leasing won’t be very beneficial for you. However, if you look forward to getting a new car, truck, or SUV every two to three years and have no interest in the trade-in/selling process of your current vehicle, you could be a prime candidate for an automotive lease. Basically, the difference between auto leasing or buying really comes down to your financial, automotive, and personal priorities.
Also, it is worth mentioning that some owners find high mileage leasing to be more beneficial in terms of financial safety and security than vehicle ownership. Statistically speaking, despite the overage fees you may pay when returning a high mileage leased vehicle, it is likely that you will come out ahead, compared to buying a car. High mileage causes a significant reduction at resale, but with leasing, it’s already taken into consideration. Additionally, the more time you spend on the roads, the more susceptible to accidents you will be. Therefore, if or when that accident occurs on your own vehicle, you would receive wreck history on CarFax, as well as a resale/trade-in deduction for vehicle damage. With leasing, you are not responsible for the deduction in value from that accident.
You have a number of options, including returning, purchasing, and trading. Regardless of which option you may be leaning toward, it may not be your best choice financially. For example, it would not be wise to return a car that is worth more than your lease contract purchase price. Buy it, then sell it and pocket the profit. There are a number of factors you need to look at to make your decision, but better call us to discuss better options.
The average credit score for people leasing cars is 745. A good credit score is required to lease a car, and generally, banks like to see a score of 650 or higher.
A car lease is a debt obligation, like a loan. In fact, leases are often not identified as leases and can look just like loans on the report. Sometimes the amount owed includes the lease residual amount, sometimes not. It depends on the company doing the reporting to the credit bureau.
The most common term for a car lease is 3 years. A major benefit to a 3-year lease is that the vehicle warranty is normally for 36k miles or 3 years, meaning that there is little risk for out-of-pocket repair during the lease.
Most car leases allow from 5,000-15,000 miles on the vehicle per year. Higher mileage leases cost more. Miles cannot be added or bought in the middle of a lease. It is important to know approximately how many miles you drive per year before entering into a car lease because you will be charged for every mile from $0.15 to $0.3 per mile depending on the car’s make. If you don’t want to pay all the fees you’ll owe, try selling the car yourself.
Yes, but it’s a little different than for a loan. You always pay a finance fee or rent charge, called money factor, on a car lease just as you pay a finance fee, called interest, on a car loan. The money factor is expressed as a very small number such as .00175 but can be converted to APR interest rate by multiplying by 2400. For example, a lease money factor of .00175 is equivalent to 4.2% APR interest rate.
No. A lease is a long-term contract. Its terms and conditions cannot be changed mid-lease, nor can the lease contract be rewritten. Furthermore, it’s not possible to “refinance” a lease, and remove a co-signer, as might be possible with a loan.
Yes. As long as your window tint is compliant with state laws, you are able to tint the windows on your lease. Factory accessories are also allowed on any leased vehicle. After-market / third-party accessories are not permitted.
Collision and comprehensive coverage is required on every leased vehicle same as financed.
GAP insurance is included as a part of the lease. GAP insurance works alongside collision and comprehensive coverage insurance. Since vehicles depreciate most in the first year or two, there is a chance that if your leased vehicle is totaled, you may still owe more on the car than its true depreciated value at the time of the collision. GAP insurance will prevent the driver from having to pay out-of-pocket for the difference in what they owe and the depreciated value.
If the vehicle is totaled or your vehicle was stolen, your lease will end before its term without any penalties.
If your leased vehicle sustains repairable / minor damage during an accident, simply let your insurance cover the repairs, have the repairs completed, and turn in your leased vehicle when the lease term is over. Even if your car’s true value is less than the residual value (the amount of depreciation calculated at the beginning of your lease), you will not owe money for the difference.
Yes. If you move out of state, you will need to update the lease company of your move immediately. Vehicles can be returned to any authorized dealership in the United States! To verify that you are eligible for nationwide returns, contact your leasing company prior to your move and update them with your new address when available.
You need to be licensed and registered in the state where you are a resident. Also, your sales tax rate may be different between states, so your monthly payments may change slightly. Some states (Georgia) require taxes on vehicles to be paid upfront, annually.
Absolutely not! Go to any place that’s comfortable and convenient. Save receipts.
Most lease contracts specify who is allowed to drive a leased car. Typically, that includes a spouse or family member. Lease companies usually require a request for permission for drivers outside your immediate family. To be on the safe side, carefully read your contract or contact your lease company.
No. Leasing is not renting. Leasing is a long-term commitment similar to a loan. Once the lease contract has been signed and the vehicle driven off the dealer’s lot, the deal is done. There is no 3-day, 30 day, or any other time period in which a leased car can be returned, unless the dealer provided written notification of such a policy.
Ask your leasing company if they allow lease assumptions. If they do, you can look for someone with good credit to take over your lease. If you can’t find someone on your own, you can use an online service such as swapalease.com or leasetrader.com. Or you can try to sell the car on your own. You can always ask us to help.
If you use your leased vehicle for business purposes, you can generally directly deduct the costs as business expenses — monthly payments, insurance, mileage, maintenance — based on the percentage of business use versus non-business use. The actual benefits depend on the specifics of your business situation. For this reason and because tax rules are never simple, you should get the advice of a CPA or tax advisor before making any decisions.
Yes! Bypass the dealer showroom & save time by designing your deal online. Get approved online and customize your lease through us. Get a free home or office delivery same or next day.